Liberals, conservatives describe Carrier deal as ‘corporate welfare’

Fallout from President-elect Donald Trump’s announcement on Thursday that air conditioning and refrigeration company Carrier would keep over 1,000 jobs in Indiana continued over the weekend, as stories leaked as to the real reason behind the company’s decision and implications of the federal government meddling in private business.

While approximately 1,150 Carrier employees in Indiana will retain their positions — 850 of which are in the manufacturing sector — 1,300 jobs are still slated for relocation to Mexico, where the company operates a plant in the northeastern city of Monterrey.

Along with the widely publicized $7 million in tax breaks the company will receive from the state of Indiana, sources told IndyStar that the deal was agreed to by parent firm United Technologies, which “wants to make sure they maintain a favorable relationship” with the incoming president’s administration, according to Indiana Economic Development Corp. board member John Mutz.

Currently, United Technologies has $5.6 billion in federal government contracts that could be revoked in the future.

More importantly however, the multinational aerospace, defense and industrial company is more likely concerned about having their say in how to pursue regulatory reform, a pillar of the current Republican platform, when it is discussed both at the White House and on Capitol Hill in 2017.

“Being able to have a seat at the table regarding tax policy and potential regulatory reform or changes is quite valuable,” said Mohan Tatikonda, an operations management professor at Indiana University. “They also have exports — current and potential exports — that the federal government has a role in allowing or approving.”

Despite the feel-good nature of the announcement that decent paying jobs will be kept in America, significant political figures on both the left and right have been critical of the deal.

On Thursday, an op-ed by Vermont Senator Bernie Sanders appeared in the Washington Post decrying the arrangement for its enormous tax breaks, recalling Trump’s promise on the campaign trail to get corporations “to pay a damn tax.”

“Trump has endangered the jobs of workers who were previously safe in the United States,” Sanders wrote. “Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives. Even corporations that weren’t thinking of offshoring jobs will most probably be reevaluating their stance this morning. And who would pay for the high cost for tax cuts that go to the richest businessmen in America? The working class of America.”

Sanders went on to point out that United Technologies netted a $7.6 billion profit in 2015 and gave its outgoing CEO, Louis Chenevert, a retirement package worth $172 million in 2014.

In a more indirect manner and a different political perspective, former Alaska Governor and Trump supporter Sarah Palin authored a piece for the political blog “Young Conservatives” Friday also critical of the deal, warning that “corporate welfare” and “crony capitalism” is not the way to reinvigorate an economy.

“A business must have freedom to locate where it wishes,” Palin wrote. “When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent.”

Instead, Palin suggested “it is POLICY change that changes economic trajectory,” citing the days of the Reagan administration when taxes and regulations were cut to spur economic growth.

“Political intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist, versus establishing a policy incentivizing our ENTIRE ethical economic engine to roar back to life, isn’t the answer,” she concluded.

Ms. Palin is rumored to be under consideration for a role in the Trump administration, either as Veterans Affairs of Interior Department secretary.

 

[Salon] [IndyStar] [Washington Post] [CNN] [Image courtesy Clearing the Fog]